3/27/2014 - Business owners rarely report employee crime to police

Among other protections, employment practices liability insurance helps protect business owners in the event workers steal from them or perform some other kind of harmful act against the company. However, when theft takes place through these circumstances, most small business owners opt to deal with the matter internally rather than report to the proper officials, according to the results of a new study.

Approximately two-thirds of entrepreneurs who own a small business say they've been victimized by theft involving one of their own. However, only 16% say that they've reported the incident to the police, the analysis found, which was performed by a researcher from the University of Cincinnati.

Jay Kennedy, a recent graduate of the university's business school, noted that he arrived at his findings after polling more than 300 small business owners around Ohio's third-largest city.

"It's important to look at this topic because such theft represents a loss to the tax base and would also seem to put such businesses at risk, and so, put our overall economy at risk," said Kennedy about why he decided to do the analysis. "After all, small businesses with 100 or fewer employees comprise 97 percent of all businesses in the United States."

As to why so many small businesses decide to not report these crimes, Kennedy noted that it boils down to entrepreneurs not seeing the incident as being serious enough, emotional attachment to the wrongdoer - such as if they're a family member - and believing that by doing so it may result in more harm than good.

According to the Association of Certified Fraud Examiners, roughly 5% of revenues that organizations lose each year stems from fraud, including occupational fraud.